The impact of ict investment announcements on firms market value: an event study to Indonesia stock exchange-listed companies for the period of 2000 to 2007
EKA W, ANNISA , Dr. Didi Achjari, M.Com, ak
The Information and Communication Technology enhancement in business enterprise world since the nineteenth century has revolutionized the way business is performed. The Internet-based ICT emerges a new business model known as electronic business (e-business) Internet enables firms to drive operating efficiency and productivity. Considering those potential capabilities of e-business application, it offers long-term benefit to generate future cash flow. However, firm adopted e-business application must deal with risk due to failure in its implementation. The decision of ICT investment is expected to gain significant impact on firm's performance, which ultimately, increases firm's value. Therefore, the current study investigates the impact of ICT investment announcement on firms' market value.
Event study methodology is used to see the impact of ICT investment announcements to firms' value that is reflected by capital market reaction. The population of this study is Indonesia Stock Exchange-listed firms. The sample is the firms that announced ICT investment project in e-business application during the period year of 2000 to 2007. The analysis uses statistical test of paired sample t-test, to recognize the significance of average abnormal returns difference between before and after the event announcements. This result showed that there is no significant difference of average abnormal returns between before and after the event announcements.
Kata Kunci : ICT Investment Announcements, E-Business Application, Productivity Paradox, Firm Value, Efficient Market Theory, Event Study Methodology
